Cumulative New Tariffs and the Proposed Tariffs to Sanction Digital Sales Taxes

US businesses eyeing their bottom line as new tariffs from the White House go into effect (10% on Chinese goods) or loom on the horizon (25% on steel and aluminum goods, 25% on Mexican and Canadian goods) have plenty to keep themselves occupied. Trump’s tariffs, proposed and enacted, have different targets and means of actuation: we have already seen IEEPA legislation for the China, Mexico, and Canada tariffs, Section 232 of the Trade Expansion Act for tariffs on steel and aluminum. Future tariffs may be effected by these or other legislation, and will be cumulatively impact importers in relation to the country and industry they are designed to sanction.

By way of example, Trump has proposed tariffs on automobile parts in particular, and on Canada in general. If such tariffs were implemented, then a steel automobile part from Canada could be subject to 3 different tariffs on top of its general import tariff, or possibly even 4 if tariff-related sanctions are imposed against Canada or other countries in retaliation for their Digital Services Taxes (DSTs).

A memorandum on the subject was published by the White House on Friday, February 21, 2025 titled “Defending American Companies and Innovators From Overseas Extortion and Unfair Fines and Penalties.” DSTs are taxes imposed on foreign companies operating a digital service in the country imposing the tax: for example, Google is subject to a DST on its revenues in the UK . The White House’s memo on the subject claims these taxes “violate American sovereignty and offshore American jobs, limit American companies’ global competitiveness, and... [expose] sensitive information to potentially hostile foreign regulators,” and go on to say that the Trump administration will impose tariffs and take any other actions necessary to “mitigate the harm to the United States.”

The memo further directs the US Trade Representative (USTR), Secretary of Treasury, and Secretary of commerce to commence an investigation of other countries for unfair practices such as DSTs and to recommend appropriate action in reports dues by March 21 and April 1 respectively, and specifically calls for investigations of the DSTs of France, Austria, Italy, Spain, Turkey, and the United Kingdom, as well as EU countries generally and Canada.

Any tariffs or sanctions initiated as a result of these investigations won’t go into effect until the results of these investigations are delivered to the White House, but we have seen how the Trump Administration can move fast in implementing tariffs when it considers them expedient, so the threat of additional tariffs on the countries this memo targets is real and getting closer.

Increasingly careful calculus will be incumbent on US business to understand their real and potential tariff risks as the White House continues to generate new trade legislation.  Allyn International’s service suite includes consultation on current and developing issues in the US trade community. Reach Allyn here for a consultation or, contact us sales@allynintl.com or 239-489-9900.

Contributor: Andrew Dosher

---

About Allyn International 

Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance.  Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North America, Europe, and Asia. Allyn’s regional headquarters are strategically located in Fort Myers, Florida, U.S.A., Shanghai, P.R. China and Prague, Czech Republic. For more information, visit www.allynintl.com.